Follistatin (FS) is a single chain glycoprotein that has been shown to irreversibly bind and neutralize activin, a pleotropic growth factor in the TGF-beta superfamily. Although transcribed from a single gene, alternative splicing and post-translational proteolytic modifications produce 3 FS core proteins differing in their c-terminus, tissue distribution, and in their biochemical and physiological properties. Since activin is a critical regulator of ovarian folliculogenesis, bone formation, tissue fate determination, and other developmental and physiological processes, and FS expression largely overlaps that of activin, FS actually functions as a critical "on/off switch" in governing the biological actions of activin. In addition, activin is a critical regulator of granulosa cell proliferation and differentiation within developing follicles. Since FS production increases throughout follicular development and granulosa ells secrete both activin and FS, it is clear that the interplay between these two molecules influences how granulosa cells and follicles mature during the normal menstrual cycle. Moreover, our preliminary studies indicate that the different FS forms may have different activin-regulating functions. Thus, the broad goal of this proposal is to define the regulatory mechanisms and cellular consequences of post-transcriptional proteolytic processing of FS315, a process which ultimately determines the function and distribution of FS within the body and developing follicle. In the first Specific Aim, we propose to isolate and purify the FS315 processing protease using a cell line that we have demonstrated has this important proteolytic activity. Once cloned, hormonal regulation of expression and activity will be determined. The second Specific Aim focuses on the intracellular location of this protease and the distribution of processed and unprocessed FS inside and outside the cell. In the third Specific Aim we will characterize the functional differences between unprocessed and processed FS, examining both extracellular and potential intracellular activities of FS and activin. The studies will result in a better understanding of how different forms of FS are produced in different tissues as well as their biological activities, a necessary prerequisite to elucidate the physiology of FS in the human.